SEC News Digest

COMMISSION ANNOUNCEMENTS

Matthew Martens Named Chief Litigation Counsel in SEC Division Enforcement

The Securities and Exchange Commission today announced that Matthew T. Martens has been appointed Chief Litigation Counsel of the Division of Enforcement, where he will oversee the litigation program as conducted by attorneys in the Washington headquarters trial unit and coordinate the activities of trial attorneys across the enforcement program in the 11 regional offices.

Mr. Martens has worked as an Assistant U.S. Attorney in the U.S. Attorney's Office in the Western District of North Carolina since 2003, most recently serving as Deputy Criminal Chief where he supervised prosecutors in the white collar crime unit. As Corporate & Securities Fraud Coordinator in that office for the past six years, Mr. Martens started their securities fraud practice and built it to include cases and investigations involving insider trading, accounting fraud, stock options backdating, fraudulent private placements, Ponzi schemes, pump-and-dump schemes, boiler room operations, naked short selling, and embezzlement.

"Matt is a highly accomplished lawyer and litigator who throughout his career has earned accolades from his colleagues and adversaries alike," said Robert Khuzami, Director of the SEC's Division of Enforcement. "Adding Matt's considerable talent to the skill and dedication of the existing SEC trial attorneys will ensure that investor interests are pursued vigorously in litigation and at trial."

Mr. Martens said, "I am honored to join the Enforcement Division at this historic time for the Commission. Over the course of my time in the U.S. Attorney's Office, I have had the privilege of working with many of the dedicated members of the SEC enforcement staff across the country, and I look forward to joining such a talented team as we pursue the critical mission of investor protection."

In the U.S. Attorney's Office in the Western District of North Carolina, Mr. Martens tried 14 jury trials involving charges of securities fraud, mortgage fraud, money laundering, tax fraud, perjury, vote buying, fraudulent firearms sales, gun possession, bank robbery, drug trafficking, and murder.

Prior to working for the U.S. Attorney's Office, Mr. Martens was Chief of Staff to Assistant Attorney General Michael Chertoff in the Criminal Division at the U.S. Department of Justice. Earlier, he was a Litigation Associate at Latham & Watkins LLP.

Mr. Martens is filling the Chief Litigation Counsel position previously held by Luis Mejia, who left the agency for the private sector.

Mr. Martens served as a law clerk to then-Chief Justice William Rehnquist of the Supreme Court of the United States. He also clerked for Judge David Sentelle of the U.S. Court of Appeals for the District of Columbia Circuit.

Mr. Martens received his JD with highest honors (valedictorian) from the University of North Carolina School of Law and his undergraduate degree in accounting with highest honors from Cedarville College. (Press Rel. 2010-139)

ENFORCEMENT PROCEEDINGS

Delinquent Filer's Stock Registration Revoked

The registration of the registered securities of Asia Electronics Holding Co., Inc., has been revoked. The company had repeatedly failed to file required annual and quarterly reports with the Securities and Exchange Commission. Thus, it violated a crucial provision of the federal securities laws that requires public corporations to publicly disclose current, accurate financial information so that investors may make informed decisions. The revocation was ordered in an administrative proceeding before an administrative law judge. (Rel. 34-62622; File No. 3-13943)

SEC Settles With Former Officers of Subprime Lender New Century

On July 29, 2010, the Commission accepted settlement offers from three former officers of New Century Financial Corporation. Brad A. Morrice, the former CEO and co-founder; Patti M. Dodge, the former CFO; and David N. Kenneally, the former controller, consented to the relief described below without admitting or denying the allegations in the Commission's Complaint. The settlement offers, which have been submitted to the Court for approval, are contingent upon the Court's approval of a global settlement in In re New Century, Case No. 07-931-DDP (C.D. Cal.).

The Commission's complaint alleges, among other things, that New Century's second and third quarter 2006 Forms 10-Q and two late 2006 private stock offerings contained false and misleading statements regarding its subprime mortgage business. The complaint further alleges that Morrice and Dodge knew about certain negative trends in New Century's loan portfolio from reports they received and that they participated in the disclosure process, but they did not take adequate steps to ensure that the negative trends were properly disclosed. The Commission's complaint also alleges that in the second and third quarters of 2006, Kenneally, contrary to Generally Accepted Accounting Principles, implemented changes to New Century's method for estimating its loan repurchase obligation and failed to ensure that New Century's backlog of pending loan repurchase requests were properly accounted for, resulting in an understatement of New Century's repurchase reserve and a material overstatement of New Century's financial results. The complaint further alleges that Dodge was told of the methodology changes and the backlog of repurchase requests but did not ensure that they were properly accounted for and disclosed.

To settle the charges, Morrice consented to the entry of a permanent injunction prohibiting him from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and the internal controls, false statements to accountants, and certification provisions of Section 13(b)(5) of the Exchange Act and Rules 13b2-2 and 13a-14 thereunder; and from aiding and abetting violations of the reporting provisions of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-11, and 13a-13 thereunder. He also agreed to disgorge $464,354 with $76,991 in prejudgment interest thereon, and to pay a $250,000 civil penalty.

To settle the charges, Dodge consented to the entry of a permanent injunction prohibiting her from violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and the books and records, internal controls, false statements to accountants, and certification provisions of Section 13(b)(5) of the Exchange Act and Rules 13b2-1, 13b2-2, and 13a-14 thereunder; and from aiding and abetting violations of the reporting provisions of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-11, and 13a-13 thereunder. She also agreed to disgorge $379,808 with $70,192 in prejudgment interest thereon, and to pay a $100,000 civil penalty.

To settle the charges, Kenneally consented to the entry of a permanent injunction prohibiting him from violating the antifraud provisions of Sections 10(b) of the Exchange Act and Rule 10b-5 thereunder, and the books and records, internal controls, and false statements to accountants provisions of Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2 thereunder; and from aiding and abetting violations of the reporting provisions of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-11, and 13a-13 thereunder. He also agreed to disgorge $126,676 with $23,324 in prejudgment interest thereon, and to pay a $32,500 civil penalty.

Each of the defendants also agreed to be barred for five years from serving as an officer and director of a public company.

Disgorgement, prejudgment interest, and penalties will be distributed to harmed investors pursuant to the Final Judgments.

For further information see LR-21327; AAER No. 3079 (Dec. 7, 2009). [SEC v. Brad A. Morrice, et al., Civil Action No. CV 09-01426-DDP (C.D. Cal.)] (LR-21609; AAE 3162)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by the Chicago Board Options Exchange (SR-CBOE-2010-068) to amend its Fees Schedule to make changes related to options on Exchange-Traded Notes and Exchange-Traded Funds has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62579)

A proposed rule change filed by OneChicago (SR-OC-2010-03) amending Rule 419(a), Regulatory Halts has become effective under Section 19(b)(7) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62582)

A proposed rule change filed by the EDGX Exchange (SR-EDGX-2010-08) to amend EDGX Rule 11.12 regarding limitation on liability has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62587)

A proposed rule change filed by the EDGA Exchange (SR-EDGA-2010-08) to amend EDGA Rule 11.12 regarding limitation on liability has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62588)

A proposed rule change (SR-NASDAQ-2010-095) filed by The NASDAQ Stock Market to increase Closing Cross Fees for Market-on-Close and Limit-on-Close Orders has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62592)

A proposed rule change (SR-ISE-2010-79) filed by the International Securities Exchange to add 75 options classes to the Penny Pilot Program has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62594)

A proposed rule change (SR-BATS-2010-019) filed with the Commission by BATS Exchange to add seventy-five options classes to the Penny Pilot Program has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62595)

A proposed rule change (SR-CBOE-2010-070) filed by the Chicago Board Options Exchange relating to the Penny Pilot Program has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62596)

A proposed rule change filed by BATS Exchange to Establish a Short Term Option Program (SR-BATS-2010-020) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62597)

A proposed rule change filed by NYSE Amex (SR-NYSEAmex-2010-75) to amend certain of its rules in connection with the decommissioning of the odd-lot system has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62599)

The Commission issued notice of filing and immediate effectiveness of proposed rule change (SR-NYSEArca-2010-72) filed by NYSE Arca pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 amending Rule 7.31(x). Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62600)

A proposed rule change filed by the National Stock Exchange (SR-NSX-2010-09) to adopt enhanced customer disclosure rules concerning transactions outside of regular trading hours has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62601)

A proposed rule change filed by NYSE Amex that constitutes a stated interpretation with respect to the meaning, administration, and enforcement of NYSE Amex Equities Rule 128(g) (SR-NYSEAmex-2010-74) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62606)

A proposed rule change filed by New York Stock Exchange that constitutes a stated interpretation with respect to the meaning, administration, and enforcement of Rule 128(g) (SR-NYSE-2010-55) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62609)

A proposed rule change filed by NYSE Arca that constitutes a stated interpretation with respect to the meaning, administration, and enforcement of NYSE Arca Equities Rule 7.10(g) (SR-NYSEArca-2010-73) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62610)

Approval of Proposed Rule Changes

The Commission approved a proposed rule change filed by NYSE Arca (SR-NYSEArca-2010-48) amending Rule 6.76A to eliminate the guaranteed allocation for Lead Market Makers and Directed Order Market Makers under certain circumstances. Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62598)

The Commission granted approval of a proposed rule change, as modified by Amendment No. 1 thereto, submitted by NYSE Arca (SR-NYSEArca-2010-49) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 regarding listing and trading of the WisdomTree Emerging Markets Local Debt Fund. Publication is expected in the Federal Register during the week of July 26. (Rel. 34-62604)

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http://www.sec.gov/news/digest/2010/dig080210.htm